At the 4-hour TF, bitcoin spent the past day practically standing in one place. After its quotes have consolidated below the trend line, it can continue to fall with a target of $ 40,746. Although bitcoin has tended to grow in the last two or three months, we believe that this is a correction against the stronger previous fall. Thus, in the medium term (two to three months), it may fall to $ 31,100. Interestingly, it is during this period that two increases in the Fed's key rate of 0.5% are expected and the start of unloading the Fed's balance sheet at $ 95 billion per month (from May).
The next year and a half will be very difficult for bitcoin".
Barry Bannister, Stifel's chief stock market strategist, holds approximately the same opinion. "When the Fed tightens monetary policy, bitcoin is not the best investment tool," he said. "Due to excessive policy tightening, bitcoin will fall to $ 10,000." Bannister recalled that bitcoin shows growth when the Fed rates are "dovish" and the M2 money supply is growing. However, the Fed's reverse program will begin in the coming months, so it is reasonable to assume that bitcoin will begin to fall again. Moreover, the Fed is going to tighten monetary policy over the next year or two. This means that at this time bitcoin may also be under strong pressure, as the yield on bank deposits and treasury bonds (safe assets) will continue to grow, and the money supply will decrease.
Bannister also recalled that bitcoin crashed in 2018 when the Fed raised rates several times. And in 2020, it showed a mind-boggling growth, when rates were reduced to almost zero, and trillions of dollars were poured into the economy under the QE program. Along with bitcoin, gold, which has no profitability, may also suffer. Bannister also believes that the Fed will tighten monetary policy until it curbs inflation. Considering that by the end of March it may grow to 8.5%, it will take a lot of effort and time to return this figure to 2%. Even the Fed itself believes that the real rate to curb inflation is 3.5%. This can be achieved no earlier than next year, which coincides with Bannister's forecast. As you can see, even one "Fed factor" may well be enough to drop bitcoin to $ 10,000. Moreover, it is very difficult to say when a new cycle of lowering the Fed rate will begin so that conditions for growth will be created for the cryptocurrency again.
On the 4-hour timeframe, the quotes of the "bitcoin" are fixed below the trend line, so the decline may continue in the coming weeks. It was necessary to sell bitcoin when the price broke the trend line. The goal is $ 40,746. A further drop with a target of $ 34,267 if the level of $ 40,746 is overcome.
